Your credit score is really important as it affects your ability to be accepted for any sort of finance, credit or loan. If you find yourself with bad credit, you may be worried about your chances of being accepted for any future finance. For finance or credit lenders, having bad credit means you are seen as more of a risk as you’ve probably had repayment problems in the past. Refused Car Finance have put together a few ways in which you can easily increase your credit score!
What is your credit score?
Your credit score is a numerical indication of how likely you are to be accepted for finance or credit which is recorded on your credit file. Your credit file is basically a financial CV which shows your borrowing and repayment history. Your credit score is usually a number which is based on your personal information, payment history, amount of credit available to you, length of credit history and number of credit searches. Your credit score affects your chances of getting approved for many things in life such as mortgages, mobile phone contracts, car finance, personal loans, over drafts and more! So, how can you repair a bad credit score?
Register on the electoral roll
This is one of the easiest ways you can improve your credit score. If you’re not already on the electoral roll you should register yourself as soon as! Even if you’re not bothered about voting, it can be really beneficial. The electoral roll is an easy way for lenders to verify who you say you are and confirms your living address and history. Lenders are usually in favour of people who don’t move around a lot and seem to have more stability.
Check your credit file
You can check your credit file online for free with Noddle or Equifax. You should aim to check your file at least once a month. Keep an eye out for any mistakes or fraudulent activity as this may be negatively affective your score. You should also look for any financial partners on your file. If you’ve taken out any credit with someone else in the past you can also be financially linked. If they have a bad credit, it can also drag your score down. It’s best to dissociate yourself from any joint accounts you no longer need.
Multiple credit applications
If you make many applications for credit in a short amount of time, this can be recorded on your credit file and indicates to lenders that you can’t handle your current credit or you are desperate for more. If you are looking for finance, you should try use companies who offer a ‘soft search’ credit check which doesn’t leave a mark on your credit file or affect your current score.
Make all your payments on time
It may not sound simple if you have had trouble repaying bills in the past. But the best thing you can do is to make sure you make all your payments on time. You could set up payment reminders or direct debits to make sure you never miss a payment. You should also work on proving you’re better at meeting financial deadlines before you even apply for credit. For example, if you were applying for something like car finance with bad credit, you should make all your repayments for at least 3 months in the run up to your finance application. This shows car finance lenders that you are more reliable now and may be more likely to be accepted.
Consider a credit rebuilding card
If you’re confident you are in a position to rebuild your credit score with a credit card then great! However, if you can’t make your repayments, you can get yourself into a worse financial situation. By using some of the credit available on your card and paying it back in full each month can prove to potential future lenders you are good at making repayments and can improve your credit score. If you can repay in full each month, make sure you pay back at least the minimum required!
Close any unused accounts
If you currently have credit cards or open bank accounts that you don’t use anymore, you should consider closing any unused accounts. Your credit file shows the amount of credit you have available to you. Lenders may look at your available credit and assume you can handle any more.